I dread to look at Reid every day. The guy is like a scarecrow. A dusty scarecrow, wearing pants that look like the farmer shat in them before putting them up in the field.

This is going to be interesting now. We'll see what amount of this part of "Crisis 2008" (TM) is hype and what's real. GM first said they couldn't last through year's end, then it became February. Ford first said they don't need any money, then it became 9 billion. Amazing what a week can do.

And, as for the UAW getting into the spirit of concession, well, John from Ann Arbor said it as well as anyone could, so all I can do is concur.

These bozos are still acting like the minority party, like they'll have the Republicans to blame for their inability to function. I wonder how long that's going to work...oh I guess probably as long as the media feels like reporting it that way.

The Dems are doing the same thing on the bailout as they did on the war: let the vote go where the voters want, then shout defeat as loud as you can, blame somebody else and declare yourself champion of the other side.

Actually, the markets will look upon no deal as a better deal than the one that was on the table now.

The idea that we should throw good money after bad, with no restrictions, is negative to the market. The restructuring of the automobile industry through Chaper 11 and jettisoning of the extortionist union contracts would be a welcome relief to Wall Street.

Wall Street, unlike the BOZOS in Congress understand what a balance sheet and profit and loss statement should look like.

Wall Street also has another scandal to swallow as another Master of the Universe disclosed his Funds are now broke after 7 billion in redemptons - because the rest of the equity (70 billion in 2003) was pumped back into paper gains and to afford his family a sumptuous lifestyle. Another Ponzi scheme from the "best left unregulated Free Market!"

Like with the Fastows of Enron fame, Bernard Madoff ran his scam as a family cabal. Mr. Madoff ran the business with several family members, including his brother Peter, his nephew Charles, his niece Shana and his sons Mark and Andrew.

Announcement of his, and possibly other family members implicated, on Friday.

The Fastows had their US and Israeli passports seized so they couldn't flee. Sounds like a good idea with the Madoffs, though they may not have the dual citizenship & Israeli passports like the Fastows did.

Reid can't set off a panic. We've been in a pretty much continuous state of market panic since the Lehman Brothers bankruptcy in September, and Reid was commenting on the fact that this will clearly keep it going. But blaming it on Reid is ridiculous. Investors will dump on the market tomorrow, but that is in reaction to the failure of the deal, not to one line spoken by one Senator.

It's a little like a few months ago when some on the right blamed Charles Schumer when he said that IndyMac Bank was in bad shape, for the failure of the bank. Which was exactly backwards. IndyMac failed because it was in bad shape, because it had been mismanaged, which Schumer was only guilty of being honest about.

One of the more curious — but not unprecedented — incidents in the last couple of weeks involved Harry Reid. The Wall Street Journal explains:

Just as U.S. credit markets this week were close to the edge of the cliff, threatening capital-starved businesses large and small, Senate Majority Leader Harry Reid stepped in front of reporters and offhandedly announced:“One of the individuals in the caucus today talked about a major insurance company. A major insurance company — one with a name that everyone knows that’s on the verge of going bankrupt. That’s what this is all about.” The next day, share prices fell sharply across the insurance industry. Let us stipulate we do not think it necessary for even U.S. Senators to understand the internal mechanics of credit default swaps and collateralized debt obligations. But if we have learned anything amid the panic over Bear, Lehman, Merrill and adventures in naked short-selling, it is that rumors can obliterate economic value, instantly.

But this wasn’t the only such incident:

It calls to mind Senator Chuck Schumer’s public suggestion in July that troubled IndyMac Bank “could face collapse.” It did, after a deposit run. Senator Schumer said criticizing his action was akin to blaming “the fire on the guy who called 911.” The nation’s shareholders would sleep better at night if some Members of Congress enrolled in Arsonists Anonymous.

All of this raises the question: are they trying to make things worse in the hopes of furthering their party’s election prospects? Similar suspicions were raised when Nancy Pelosi seemed to inflame her partisan opponents and resist any effort to whip her own caucus on the first failed bailout bill vote. Certainly as the financial crisis has intensified their electoral prospects have brightened.

Here's more from Rubin's article on Reid, et al, with respect to their destructive attitude on the war in Iraq:

It does remind one of their attitude on the Iraq war: every set back was gleefully trumpeted and every minor advance was dismissed. They never much cared how their rhetoric or votes might embolden the enemy or unnerve our ally. The sole consideration was domestic political gain.

Reid is a malignancy on the face of our nation. There is no good in him.

The Asian Markets have already been tumbled today because of the news. I wonder how much worse it will get before it gets better.

I am torn about this whole thing.

My parents who only buy American car, similar to many in their generation, don't know where they will buy their next car. I have never and would never buy an American car.

I hate to see a bunch of people lose their jobs and this looks like this will happen.

But the cars those companies are making are tired and have been tired for awhile. I blame the American car companies for not coming up with new cars to make that would interest new buyers. The way it stands now their buyers are my parents age group.

Tom Friedman had a good article in the Times recently that states it better than I can.

If the companies do go bust what a wasteland Michigan will be though. Even more of a wasteland than it is now. I do feel bad for the citizens of Michigan though. All the businesses around those car companies will probably go bust too.

I read an article that said Bush could still allocate money from that 700 bailout to the auto companies. I bet he will. The White House was supportive of this bill so they will likely throw the car companies a bone.

Bettie Page died. I loved that movie that came out about her recently. After I watched the movie I dug up as many interviews of her as I could. She would never be photographed or recorded now because she wanted people to remember her when she was young-I thought that was kind of sad.

Titus, American branded cars are much better than you give them credit for. JD Powers and other surveys show us that.

A huge issue is that American car companies spend a lot more money on labor to assemble their cars than the Japanese do, yet they sell for about the same price.

That difference in cost comes out of engineering and parts. This means the Japanese can spend more on engineering per car with the obvious results.

I firmly believe that if Ford/GM/Chrysler had competitive labor wage levels and so were able to invest more into engineering, they could and would beat the Japanese and Germans.

Also, if the big three go away America will lose a lot of engineering and materials science capabilities. As we are losing (giving away really) our computer and networking high technology engineering skills to China and India, we really don't need to be losing even more basic science and engineering capabilities that are important to our future.

As a nation, we have to be about more than Toyota dealerships, Starbucks and Walmart.

The new Buick Lacrosse coming out in the spring was largely designed in China on a platform largely engineered by Saab in Sweden. Ford is about to bring their European small cars to the US. That expertise may be dispersing regardless.

It is almost funny, in a pathetic way, how many people with cushy jobs (that often allow them to post to blogs like this one through out the day) buy into to the notion that U.S. auto workers make to much money and have too many benefits. Being from from Flint, Michigan ("Buick City") and still having most of my family there, I know better.

The starting wage at G.M. is now around $12-$14 an hour. Once again, this is not for some cushy job where you get to read and post to the internet all day while working. This is doing real labor.

I have heard many commentaries saying that G.M. has to many "legacy costs" with health care insurance being the main one. Obviously, Japan, South Korea and most other auto producing countries do not have these cost because they have universal national health care.

It seems many conservative Republicans don't want working class people in this country to have healthcare insurance either through their government or their employer. I guess for these people healthcare is only for those with cushy jobs who can type all day on the internet clucking about those over fed auto workers and their grabby union.

But their average wage is about $30/hr plus another $40 in benefits (largely estimated retirement benefits). They've had a good long ride on the gravy train, but it's over, unless Congress nationalizes the industry next year.

"What do autoworkers really make? Detroit's hourly workers earn $28 an hour, or $57,000 a year. (Toyota workers make $25.) Benefits and payroll taxes bring the total cost per worker up to $54 an hour, versus $47 at Toyota. Under a breakthrough labor contract in 2007, new hires in non-assembly jobs will be paid only $14 an hour and will receive less generous benefits, which will narrow that remaining gap considerably."

My answer would be that if you are a follower of Ayn Rand you would say "yes." If you believe that the United States needs a strong middle class and is not defind by a "survival of the fittest" ethos then you would say "no."

It should also be noted that this is the product of free trade agreements that do not have labor standards. Over the last decade CEOs and top management have been making exponentially more and more while those who actually do the hard work are being asked to earn less and less. Welcome to capitalism without rules!

The "bailout" is about the union votes, otherwise the prospective job losses wouldn't be a blip on the Congressional radar screen.

Have the Dems been exorcised about the 10,000 jobs lost at CitiBank? Or the announcement that Bank Of America will cut 5,000 jobs? No, not one bit, because those are non-union workers, workers who do not belong to an organization that funds campaign coffers.

This isn't about cars. Congress doesn't give a damn about cars, except to dislike them, else why so many regulations that were intended to stifle the car makers, make their products more expensive to purchase and operate.

My question is this: Who will bail out the government? We're broke, and the Dems want to throw $$$ at everything that will produce a voting block.

I'm glad this monstrosity of a handout is dead. It was the wrong way to go. Having the federal government keep credit from collapsing is one thing (and it had better be a brief endeavor), but taking over car companies is pure socialism.

Health care is expensive precisely because our nation voted it so. We made it impossible for insurance companies to offer anything but complete coverage of all care; not just catastrophic insurance (which most 20-yr-olds could afford and never need), but paying for every sort of visit and even eyeglasses.

We promised ourselves the moon, and we couldn't afford it. Don't hang US extravagence on Republicans. They were no help in staving off the debacle that is health care in the US, but the Democrats shaped its decline by beginning Medicare in the 1960s, and by accident in the 1940s (tying health insurance to jobs in a way that hid income from taxation).

We are facing the inevitable consequances of overspending. Blame Republicans? Bullshit.

So dead on about the health care, Pogo. I remember getting a job when I was 19 that had hospitalization insurance. I was thrilled with that! I was young, healthy, and I was covered if I got really sick.

What has happened to the way Americans think about this?

Anyway...so the bailout is dead. Why do I think the Republicans, who did the right thing...are going to pay for this?

Here's a tiny example of how this event will shudder through the economy:

A few weeks ago as me and this artist girl were heading for a "Eagles of Death Metal" concert, I totaled my car {"The brown bomber" I call it] going 60. Hit a sex-crazed deer. A buck. They can't help it. They go mad for the does this time of year.

I felt the thud and crunching as the animal was mangled under the wheel. Took out the bomber's headlight, smashed the grille, bashed the front right panel, and smashed the door. Total fucking loss.

I'm here. The deer is gone. That's how it is in the animal kingdom. Some survive to pass on their genetic material. Others get turned into sausage.

I was thinking about getting a Chevy Traverse. an SUV crossover. Big as minivan inside, but a manly beast on the outside. About $28. Maybe less because I'm such as a sharp negotiator.

Instead, yesterday I bought a used car from a nurse for $2,000. (Said her hobby was making cakes.)

Why should I take the risk that parts for the Traverse won't be available in several years or that the warranty might be honored? In this unhinged global economic mess? I think not.

(Incidentally, the used car needed a new window motor and regulator. Repair shop called Chevy. It wanted $983 for the parts. I called a parts store and got the parts for less than $100. WTF.)

Why do I think the Republicans, who did the right thing...are going to pay for this?

Because they led the charge to oppose the bailout.

It remains to be seen how this will play out. I don't buy the line that Chapter 11 means people won't buy their products, if that was the case, no company would ever come out of reorganization and would simply be liquidated.

The Big Three need to swallow the castor oil and go Chapter 11, reorganize, cancel those unsustainable union contracts and start fresh. Hey, the theme of the day is CHANGE CHANGE CHANGE. If it's good enough for the country, it's certainly damn good enough for the US auto industry.

So dead on about the health care, Pogo. I remember getting a job when I was 19 that had hospitalization insurance. I was thrilled with that! I was young, healthy, and I was covered if I got really sick.

What has happened to the way Americans think about this?

Americans now think that if they go to the doctor, someone else should pay. Milton Friedman explained long ago what this leads to and it's nothing good.

Heck, if Harry Reid could tell the market which way to go and it obeyed him, then Obama should just appoint him secretary of the treasury instead of Geithner, and Reid would just order it to rise.

My gosh, Ann. Generally you're on target, but that line has to be the most ridiculous thing I've seen you write since 'blink-gate.'

Eli, I hate to tell you this but you're about as wrong as can be. Harry Reid is the Senate Majority leader not some junior flunky. The words that come out of his mouth do have an effect. I watched first hand the effect in the insurance industry when he popped off about a major insurer that was on the brink of failure and the same day, life insurance stocks crumpled.

Words mean things. If you don't think the Senate Majority Leader's statements can't have an effect on the market then you are the one who needs a grip on reality.

Age discrimination only for people over 40 is illegal for precisely this reason. But if you looked at the numbers, it’s the benefits that are killing them, not the salary. And just doing a nonscientific read of people around me who are democrats, I don’t think Republicans will suffer for this. A lot of sympathy was lost when that salary data got around.

The high-stakes talks broke down over when the wages of union workers would be slashed to the same level as those paid to nonunion workers at U.S. plants of foreign automakers such as Toyota and Honda.

If UAW workers aren't paid that much more, than why would they resist this concession?

Hourly wages aren't the only factor when a union is involved. Many people who are lazy or just plain bad at their job cannot be fired. This also drives up costs and hinders the sort of innovation that is woefully absent in the US auto industry. America manages to export every sort of "cool" all over the world, but our cars could hardly be described as such.

Worked with union people before? It's an enlightening--and depressing--experience. It is antithetical to creativity and innovation.

I don't want the US auto industry to die (I don't think it will), and I definitely don't want people to lose jobs. But I hope this means the end of the UAW. I admit I will take a perverse pleasure in the thought of UAW workers having to survive in the real world, like the rest of us, instead of the pseud-socialist world that has helped to cripple our largest manufacturing industry.

Words mean things. If you don't think the Senate Majority Leader's statements can't have an effect on the market then you are the one who needs a grip on reality.

They may have a short-term effect, but short term market effects are meaningless.

Reid's statements are apiece with the Big Two-and-a-Half's cries of disaster. It was in GM and Chrysler's interest to act stupid. They were negotiating for a cheap loan and stupid was their collateral. Even Ford chipped in with some low-key whining: if their incompetent kid brothers went out of business, they might be lonely.

The stupidest thing about this entire stupid season of bailouts is the claim -- by bankrupt companies and bankrupt politicians alike -- that panic is our only option.

The New York Times asks "What's Plan B."

Who needs a plan B? How about wait and see, guys?

The idea that what Senator Reid says has any importance at all is simply buying into the panic.

Why can't we send Bush to Iraq to find that 10 billion they LOST and have Halliburton and the rest of the band of thieves return the tens of billions they fleeced from taxpayers. Problem solved. No investment!

Why can't we send Bush to Iraq to find that 10 billion they LOST and have Halliburton and the rest of the band of thieves return the tens of billions they fleeced from taxpayers. Problem solved. No investment!

Well it took a whole 49 comments to lay the blame for the Big Three failure on Bush and Iraq.

garage mahal said... "Why can't we send Bush to Iraq to find that 10 billion they LOST and have Halliburton and the rest of the band of thieves return the tens of billions they fleeced from taxpayers. Problem solved. No investment!"

Problem not solved. Even if every cent of that ten billion was returned, not a single cent of it should go to the big three - at lest directly from the government. the best use of it would be to refund it t the taxpayer - who would give very little of it to the big three, for the same reasons they aren't giving much of their existing money to the big three.

One should be very suspicious of government supporting a commercial enterprise that is failing in the market. It's one thing for government to act as a market participant, or to support non-commercial activities with indepdent value such as NPR, but it's almost indefensible for government to just throw money at a failing corporation for which the law already provides a way out.

Knox wrote"I admit I will take a perverse pleasure in the thought of UAW workers having to survive in the real world, like the rest of us"

Girl, your profile states that you are a "graphic designer"! I am sure most auto workers would love to join your "real world". What is a tough day for you? You spill some paint at your work station and your internet connection goes down?

I can not beleive the lack of self knowledge of some people! Your life "in the real world" is tough indeed...

Well it is true. Anyways the pittance loan they are asking for is nothing compared to what we just gave away to failed banks who still aren't loaning money to people to buy cars. Foreign car makers are hurting too because of it and they will get subsidized as they always do. So Republicans will kiss goodbye another huge swath of the country with their bumper sticker that says "fuck workers save bankers". Good luck with that.

"I can not beleive the lack of self knowledge of some people! Your life "in the real world" is tough indeed..."

As someone who doesn't spend the majority of time in the real world, but who has worked in the very recent past (and will again) as a laborer on a construction crew, I can tell you from firsthand knowledge that my coworkers (the skilled workers)were barely making that new starting wage that the UAW workers will be getting from GM. And they were getting no benefits at all. They would love to have one of those UAW jobs, and they would undoubtedly be just as sarcastic in saying to all of your friends and family in the UAW: Your life "in the real world" is tough indeed...

My friends and family back in Flint would say that your coworkers doing skilled trades in construction are being screwed and should be supported so they can organize for better wages. In fact many in the trades are union and do make better wages/benefits than what you discribed.

What my Flint friends and family would not say is what Knox Girl the Graphic Designer said. They would not "take a perverse pleasure" in your old co-workers getting the very short end of the stick.

I retired in 1999, and I was making $19.45 an hour. I started working at the same company in 1965, and made $1.42 an hour. You have to learn to not spend it if you don't have it. I was glad to have a steady job. I also tried to always have a 2nd job, just to have some spending money. I still managed to pay my mortgage off when I was 34 years old.

Girl, your profile states that you are a "graphic designer"! I am sure most auto workers would love to join your "real world". What is a tough day for you? You spill some paint at your work station and your internet connection goes down?

I'm a freelancer: my job status is hardly secure. And like other self-employed Americans, I pay more in taxes for the additional risks and responsibilities.

Wouldn't it be great if we could all just slack off, get a paycheck and a pension anyway! In the real world you can't. It doesn't matter if you are digging ditches or "spilling paint"... there's no safety net. Anyone who works for a union is delivered from the worries of job security. To my mind, that's a pretty cushy existence.

AlphaLiberal said... "Too bad most of our news media won't mention the fact that the Republicans filibustered this bill to death."

The (liberal) media don't want to mention that fact because (a) they know that the bailout is deathly unpopular with an overwhelming supermajority of the country, and so (b) they would worry that highlighting the GOP's role in killing this unpopular bill would give the GOP credit for its demise.

Do us a favor, Alpha: shout it from the rooftops that the GOP killed this thing. It's about the only smart thing they've done all year, and, as you point out, the media won't report it if they can avoid it.

"How low is low enough for worker wages?"

That's a function of the market at any given time. Speculation by me or thee on the subject (or ex cathedra pronouncements from the President elect) is worth very little unless you seriously believe in wage controls. And wage controls will lead in short order to price controls, and so on... It's a slippery slope; what's at the top is ugly enough, but wait until you see the bottom.

Lee said: I am sure most auto workers would love to join your "real world". What is a tough day for you? You spill some paint at your work station and your internet connection goes down?

Yo Lee, time for you to ratchet down the B.S. The UAW is point man for a dying cause. They have extorted their way to this moment and are now trying to cover up their involvement, like a cat covering pooky with both paws.

Those of us working for $25 bucks an hour with NO health insurance or retirement benefits are being asked to "make whole" a union who has so abused the collective bargaining process to the absurd.

Time for all of Union America to cut checks to their brothers and leave the rest of us alone.

And if you want to do some real work, you are invited to crawl under the next slug infested flooded house and help me stop a leak. Until then, close your pie hole about real work.

knox said... "Anyone who works for a union is delivered from the worries of job security."

UAW may be about to get a quite brutal lesson in why that doesn't always hold. ;)

The problem is that unions generally have a conceptual blindness: they assume that a job is their right, that the company serves as a means to provide them with a job, and that the company will always be there and have more money to give out. The idea of the company folding can't be processed within that paradigm, so they can't offer concessions here without fundamentally rethinking their worldview.

First you will not get an argument from me about your screen name. Given that you are being such a tool it does make you seem dumb.

Auto workers fighting for good wages for doing hard work is not extortion. For you to think so just shows you to be a tool of Republicans who want AMerican workers to have third world wages while CEOs get bigger and bigger slices of the pie.

What my Flint friends and family would not say is what Knox Girl the Graphic Designer said. They would not "take a perverse pleasure" in your old co-workers getting the very short end of the stick.

Clever to twist my words.

Workers in the auto industry have had their entire lives wrapped up in a bow for all these years. Now they might actually have to face the very same challenges and uncertainties as the rest of us. Sorry if I don't think they are a bunch of princesses who deserve so much better than the rest of us.

My husband was a woodworker for ten years, working for a small business. His salary was nothing like these UAW salaries, and had no benefits.

My friends and family back in Flint would say that your coworkers doing skilled trades in construction are being screwed and should be supported so they can organize for better wages

LOL! You really don't live in the real world. What's your solution? No small businesses allowed?

The very union you champion with its absurd demands has helped to destroy the lives of the very workers it claims to "support." How can you possibly say "More of that, please!"

Somebody backs up the $70+ per hour figure with sources and your response (supported with nothing) is "LIE!".

And Alpha Liberal-

If you bothered to get off your mental ass, rather than dismiss the Heritage Foundation as a RW think tank, you might notice that they give sources that can be checked and disputed, if you so desire. You're lazy.

"You probably need to update your occupation in your profile. It currently says that you are a "professor". What gives?"

I am. It may come as a shock to working people, but I don't make nearly as much as you think. And since I have an academic year appointment, I get time off in the summers. $8 an hour toting wood in the hot sun is too much to pass up.

You do not know what you are talking about. You say "The very union you champion with its absurd demands has helped to destroy the lives of the very workers it claims to "support.""

Good union jobs have allowed American Auto workers to send their kids to college and to enter the middle class. Unions helped to bring wide spread prosperity to the U.S. for more than a half a century.

Unions are not perfect. But you are just being a brain washed tool if you believe that what is wrong with this country is workers fighting for better wages and benefits.

Two obvious responses. First, if that number is wrong, provide the correct one, with supporting evidence.

Second, even if $70 is wrong, that is irrelevant: the more important point is that no matter what the number, the wage is higher than the market can sustain. We know this because the big three are failing. Companies fail when they can't bring a product to market at a price the market will pay in sufficient quantity. The natural resonse is to reduce prices, but any product's price floor is determined by its manufacturing cost. Wages are the lion's share of a company's costs, and when inelastic relative to their market worth, wages are artificial. Since prices haven't fallen, the implication is that costs are too high to permit meaningful price reductions, allowing us to infer that wages must be artificially high or else prices would have fallen consistent with the market.

"What do autoworkers really make? Detroit's hourly workers earn $28 an hour, or $57,000 a year. (Toyota workers make $25.) Benefits and payroll taxes bring the total cost per worker up to $54 an hour, versus $47 at Toyota. Under a breakthrough labor contract in 2007, new hires in non-assembly jobs will be paid only $14 an hour and will receive less generous benefits, which will narrow that remaining gap considerably."

I guess you won't be happy until all American workers are making third world wages. I would bet that the two of you think that somehow you won't be affected by this move to drive down U.S. wages. That is why you are tools.

Second, even if $70 is wrong, that is irrelevant: the more important point is that no matter what the number, the wage is higher than the market can sustain. We know this because the big three are failing.

Then we can assume our largest banks and financial institutions are failing because of the same? Why are the big 3 so strapped just now after decades if the workers are to blame? I've never understood this from your side. We back up the Brinks truck to AIG with a 150 billion gift and we can't give a fraction of that in form of a loan to an industry that actually produces something.

"$57,000 a year is too much for working people to make, according to Republicans!"

If all working Americans averaged that, I would disagree. But there are many, many, many (the majority) "working people" who don't make anywhere near that. IOW, relative to the typical "working person," UAW workers are overpaid. Now, if it was just the issue of wages that the companies have to pay, you could probably justify it. But it's more than that.

I just realized that businesses of higher learning (universities, colleges and the like) should not have tenured jobs. They should be only yearly contracts. We should also stop protecting our lazy higher education workers through such goverment regulation as accredidation which hinders the free market. You lazy college professor types need to be on a level playing field with thirld world professors who could offer the same services through innovative internet based universities.

No, these companies need to restructure and get rid of the high labor costs which include wages, Cadillac benefit plans: health insurance for current and retired employees and MOST importantly the Defined Benefit Pension plan which is the main culprit.

A DBP is the most costly program that could ever be devised. When the market goes down has it has now, it will cost the companies even more money. Lots of money!!

This fund is different from many pension funds where payouts are somewhat dependent on the return of the invested funds. Therefore, employers will need to dip into the companies earnings in the event that the returns from the investments devoted to funding the employee's retirement result in a funding shortfall.

Included in the $71 estimated hourly cost of producing a car at the union controlled plants is NOT only wages but all of the above. With the current market decline of 50% from last year you can be certain that the DBP costs are going to go up even more.

The best thing that could possibly happen to the US auto industry is to go Chapter 11 and let the PBGC take over the pensions plans and adjust the benefits for existing retirees. The restructured companies could then offer sane and fiscally responsible benefit packages and still keep the wages at an acceptable level. A 401K plan instead of DBP combinded with a Profit Sharing Plan, HSA medical coverage for starters.

BTW: the PBGC was founded in the 1970's. Anyone else notice that ALL of the current financial and auto industry melt down is a result of Congress interfering in the free market place? 1970/77 Clean Air Act, EPA standards, CAFE Standards, Auto Safety Standards CRA, Glass Steagal removal...the list is too long to completely detail. If Congress could just keep its grubby hands off of the economy, we would be much better off.

Since this isn't the first economic crisis that I've witnessed, yeah. That's why we have safeguards. Unemployment compensation, food stamps and a host of other things for people during a crisis. Now, what to do about the auto companies, that's the question. Look, I worked in the printing industry, and we used to do printing with hot metal. Linotype machines, old letter presses. Guess what, all of those jobs and the people who worked in those industries lost their livelihood. That stuff happens. When you lose your job, sometimes you have to take the next best thing that comes along, even if you have to take a pay cut. I'd rather the auto workers took a pay cut, along with the owners and still have them working. Unfortunately, and you're not the only one, you don't help when you start name calling. It only causes pushback.

$57,000 a year is too much for working people to make, according to Republicans!"

Well I suppose if you can justify the wage by providing a product or service that people want then I say go crazy.

Let me just say that the Big 3's problems are not all solely the UAW. It's also a business model that thinks umpteen different brands of cars is a good thing.

The liberals keep harping on AIG and the bank bailouts and wonder why Big Auto isn't getting their piece of the pie? Well maybe its because those bailouts weren't popular with the people who are expected to pay the fucking bill. That would be the taxpayer who doesn't want to see more money going after a business that evidently can't make it on us buying their products but need a handout as well.

Look, I worked in the printing industry, and we used to do printing with hot metal. Linotype machines, old letter presses. Guess what, all of those jobs and the people who worked in those industries lost their livelihood.

Hey AllenS: Check this out. My parents were BOTH union printers and operated the Linotype, later Teletype.

Eventually, as you said lost their jobs because there was no need in the newspaper industry for union printers with those skills when computers became the method of production. They were forced to take early retirement and a lump sum payout because there wasn't enough in the fund for pension payments.

The AUW needs to get over itself. They are replaceable and as Darcy so aptly stated.....they have priced themselves out of jobs.

The Linotype had a pot that the lead bars were melted in. About once a year, you had to take the old asbestos packing off of the pot, and repack it with new asbestos. The asbestos came in sheets about 1/4 inches thick, about a foot long and wide. You just tore off a chunk, got it wet and packed it. About 5 years ago I used my last piece of asbestos to plug some holes in my wood burner. I doubt if I could find more. I used to also play with mercury.

Shanna: I'm assuming the "Hoover Republicans" catchphrase is related to a Politico piece which describes VP Cheney, in a closed-door meeting, as "reportedly warning that it’ll be 'Herbert Hoover' time if aid to the industry was rejected." Huffpo, among others, picked that up and linked.

I offer that strictly in what I think is the explanation, not as a personal comment on the sentiment either way.

Ah. I see AlphaLiberal already explained it and linked. Sorry for the redundancy; I got distracted mid-comment and then I didn't re-read comments before finishing mine to see if someone got there first.

Dust Bunny Queen is such a tool that she thinks that not only should american workers not receive health care from our government but they should not receive it from their employees (like the Big Three) as well. She is also so ideologically opposed to government regulation that she is cool with the fact that her parents handled asbestos at their print press jobs. But that is OK, they didn't have health care either.

Nice comment. You obviously have no concept of what value insurance has for people.

Just say it you guys hate unions, more specifically you hate people that organize period. Scary! It's not the money and never has been. So far we spent 852 billion on a stupid hairbrained misadventure sprinkling Freedom Seeds half a world away. We literally handed out bricks of cash from pickup trucks inside Iraq to people we didn't even know and now all of a sudden Republicans are "fiscally conservative"? Haha. Does.Not.Compute.

I guess we can see that "Hoover Republican" will be the latest term abused into meaninglessness by the left. It's particularly inapt when one considers that Hoover was a big government type who was against free trade and who, as Wikipedia puts it, "saw the presidency as a vehicle for improving the conditions of all Americans by regulation and by encouraging volunteerism." If anything, the Hoover Republicans of 2008 are Obama Democrats! But don't let coherency get in the way of a good soundbite, particularly when it can be misrepresented as Dick Cheney's assesment (it isn't, as context provided by Reader_Iam makes clear).

Garage, in saying it's "my side," you're assuming that I supported the AIG bailout. ;) I was ambivalent about that, and never did make up my mind before events overtook me. My instinct there was to let companies fail, but that was balanced against the knock-on effect of the credit and financial services sector collapsing, which could have had incalculable effects on. In any event, I don't think that the situation that led to the earlier bailout (for better or worse) can really be compared to this bailout. That the Bush administration are terrified for its reputation to let these American icons file for bankrupcy on its watch, and that the Democrats are terrified for its political future to let the unions become irrelevant, are not good enough reasons.

And I wouldn't cheer the failure of this bailout. Remember that the original $700 billion Wall Street package died, supposedly due to lack of oversite. They not only revived it a couple of weeks later, but it ended up being some $250 billion dollars more than the original package, and even though oversite was added to the language - guess what, there is still no oversite.

I'm not getting where DBQ said she was cool with her parents handling asbestos.

My parents didn't handle asbestos, which at the time wasn't considered any risk to anyone. They did handle lead. I also played with Mercury. The school took us on field trips so we could go to a Quicksilver mine and play with the liquid Mercury. People used to think that smoking cigarettes was cool. Lots of ideas that once were thought to be good ideas turned out to be disaterous. Like Unions.

Now we know better.

I was cool with my parents having a job.

not only should american workers not receive health care from our government but they should not receive it from their employees

alphaliberal -- how about we let the market sort out what "the workin' man" should make, rather than you, or I, or some government bureaucrat, or some union thug, assigning a number?

I suspect that if the cost per hour for a button-pusher was allowed to reach its natural equillibrium point, without being artificially imposed by unions, then it would end up somewhere considerably south of $70 per hour for wages, insurance, and retirement; and our industry would be better able to compete with the rest of the world, making those jobs much more secure.

And if that's too low, then those "workin' men" are free to go and find other jobs that pay more. They can even start their own company, and pay themselves whatever the fuck they want to -- as long as they don't then come to me after a few years and ask for a few billion dollars of my money to make their payroll.

In all their various incarnations (NEA and AFT, UAW, etc.), unions have been a millstone around this country's neck.

And before you bother to tell me that I don't know what I'm talking about: I run a manufacturing operation in the midwest. We've done some automotive work; but we tend to try to avoid it, because of the absurd hoops that you have to jump through.

In order to pay their workers $30 per hour to push a button and watch a robotic welder run, and pay $25 per hour in retirement, and $15 per hour for the Cadillac of health, dental, and optical insurance, the big 3 make a habit of brutally raping outside contractors, by insisting on seeing exactly how much they make on a job, requiring that their margin be so meager as to make it virtually worthless, and then expecting price DECREASES every year.

Just say it you guys hate unions, more specifically you hate people that organize period.

Unions served a good purpose in our history, but like many things, they went too far. I work with union employees and the union spends a good bit of time fighting for people who just flat out don’t work (some of them don’t even show up to work!) to keep their jobs. It makes it harder to reward good employees and fire bad ones. Not that a company by itself is perfect either. It’s kind of a mixed bag, unless your company is failing, in which case it’s time to get a big dose of reality.

now all of a sudden Republicans are "fiscally conservative"

Bush has never been fiscally conservative, which is why a hell of a lot of conservatives don’t really like Bush, at least on that score. But the question has always been, what is the alternative.

This also drives up costs and hinders the sort of innovation that is woefully absent in the US auto industry. America manages to export every sort of "cool" all over the world, but our cars could hardly be described as such.

Pray tell, what input does the UAW have in the design of cars? U.S. auto companies fail to innovate because they are driven by next quarters profit instead planning long term.

The Linotype machine also had space bands that would expand between words so that every line would justify to a set length. Daily, those space bands had to be cleaned in graphite. That was a known hazard and we only hired elderly men to do that work. We cleaned things with benzine. When we cleaned the blankets on the web offset presses we put on rubber gloves. I'm lucky to be alive.

I think unions can have a positive impact garage so please quit projecting. Unions stop being a postive influence when their purpose is to raid the corporate profits for themselves.

Agree... the writers' strike--last spring was it?--sounded totally reasonable to me. I think screenwriters were being denied residuals from the sale of dvds, etc. The screenwriting guild's position on that issue was certainly fair as far as I understood it.

It's the "looting" brand of unions that are so damaging. Whether the UAW succeeds or fails in these negotiations, they have done a hell of a lot of damage. Likely the rest of us "workers" will end up paying taxes one way or another to shore up their demands.

The best thing that could possibly happen to the US auto industry is to go Chapter 11 and let the PBGC take over the pensions plans and adjust the benefits for existing retirees.

So you are saying that private industry should be relieved of its contractual obligations to its workers and the general public burdened with the responsibility. How perfectly socialist of you. If companies had funded their pensions instead of artificially inflating their profits in the past, then their pension funds wouldn't be in such bad shape now.

I would really hate to live in the world you want to live in. You simply forget or ignore how bad the air, worker safety, general public health and auto safety was before all these horrible interferences by the government.

So you are saying that private industry should be relieved of its contractual obligations to its workers and the general public burdened with the responsibility.

When a company can no longer meet it's financial obligations, that is exactly what Chapter 11 is for. Or Chapter 7 if they are beyond hope. The PBGC is funded through premiums paid by those companies whose plans are protected by the PBGC. In other words, the taxpayer (general public) doesn't foot the bill.

If companies had funded their pensions instead of artificially inflating their profits in the past, then their pension funds wouldn't be in such bad shape now.

Of course the growing number of pensioneers had absolutely nothing, nothing at all to do with their downward spiral.

But, Bearbee, you ducked my question: How low do you want to drive their wages? $15k? $20k? $30k?

If workers get wages and benefits all well and good. Let the big 3 auto makers pass the costs to consumers. If they cannot compete in the marketplace with Honda, etc., then let them go down. The US has Honda, Toyota and other auto manufacturing in the US. Why do we need uncompetitive American manufacturers?

So you are saying that private industry should be relieved of its contractual obligations to its workers and the general public burdened with the responsibility. How perfectly socialist of you. If companies had funded their pensions instead of artificially inflating their profits in the past, then their pension funds wouldn't be in such bad shape now

Maybe you should do a little research into what the Pension Benefit Guarantee Fund is.

You might also want to familiarize yourself with the actuarial standards and accounting of DBPs and how the contributions to fund future and current retirees are affected by negative market performance. Which...I can assume you are aware that we are experiencing at this time.

The "cost" of a defined benefit plan is not easily calculated, and requires an actuary or actuarial software. However, even with the best of tools, the cost of a defined benefit plan will always be an estimate based on economic and financial assumptions. These assumptions include the average retirement age and lifespan of the employees, the returns to be earned by the pension plan's investments and any additional taxes or levies, such as those required by the Pension Benefit Guaranty Corporation in the U.S. So, for this arrangement, the benefit is relatively secure but the contribution is uncertain even when estimated by a professional.

And what happens when the day comes (as it most certainly would if GM dumped its pension liabilities into the fund) when the contributions do not cover the payouts from the fund?

You might also want to familiarize yourself with the actuarial standards and accounting of DBPs and how the contributions to fund future and current retirees are affected by negative market performance.

And you--who claim to be a financial adviser, might want to familiarize yourself with how avoid adequately funding their pension plans by skipping contributions when the market is hot and then running to the government, as they are doing now, pleading poverty, when the market is bad, so that pension funds get shorted in both good and bad times.

Are we supposed to be shocked by that "action alert", AlphaLiberal Do you understand that the UAW works for electing Democrats exclusively? Does that seem at all worrisome to you?

I do think there are a lot of Republicans who would love to bust this union if they could. No surprise there. But then again...back to the original conservative thought here - the government should not be bailing out failing private businesses. There is a system in place for that - bankruptcy. (And, in the rare instances where they might consider it...only when it is in our national interest to do so - it isn't here) I don't care how they arrive there, really. I just care that they do.

Now, can you make an argument that the Republicans will probably fuck things up by these stupid action alert revelations, and a failure to effectively explain their position? Yes.

If they cannot compete in the marketplace with Honda, etc., then let them go down. The US has Honda, Toyota and other auto manufacturing in the US. Why do we need uncompetitive American manufacturers?

It's been demonstrated that UAW wages are nearing competitive levels with other companies. And they're making more concessions.

The health care costs of the American health care system are hobbling competitiveness.

Generally speaking, management at US automakers have made terrible decisions in marketing, product lines, etc.

You ignore the crater your preferred course of action would leave in the American economy. It's not just these companies, but their suppliers and the communities for all these plants. Is that really the best course of action?

(And, again, this is more abuse of the filibuster by Republicans. The Dems need to stop being pussies and force the Repubs to stand up on the floor and really filibuster.)

AlphaLiberal said... "Bottom line: The ... Republicans are trying to bust the UAW ... The economy is crumbling and all they can do is attack, attack, attack other Americans."

If market distortions caused by unions are contributing to economic malaise, an argument can be made that seeking to uproot (or at least marginalize) unions is a recovery plan. That is a simplification, of course, because there are many distorting factors (government interference of any kind distorts the market, to name only one example) and there are some unions that are innocuous in this context (plumbers' unions, for example) - but it suffices to demonstrate that your point rests on a gross oversimplification.

And what happens when the day comes (as it most certainly would if GM dumped its pension liabilities into the fund) when the contributions do not cover the payouts from the fund?

Freder

May I suggest you visit the PBGC website and familiarize yourself with how it works.

And you--who claim to be a financial adviser, might want to familiarize yourself with how avoid adequately funding their pension plans by skipping contributions when the market is hot and then running to the government, as they are doing now, pleading poverty, when the market is bad, so that pension funds get shorted in both good and bad times.

AlphaLiberal said... "You ignore the crater your preferred course of action would leave in the American economy."

What crater would be left by a chapter 11 filing? Even the New York Times can't come up with an answer, falling back on trite speculative generalities ("allowing one or more of these companies to collapse into bankruptcy proceedings could potentially cause the loss of hundreds of thousands of jobs and even greater economic havoc") and outright lies (the so-called recession was "caused in large part by this sort of anti-government and anti-regulatory dogma," a claim that approaches the laughable when the "crisis" was touched off by a crisis in two of the industries most heavily interfered with and regulated by the government).

A guy I knew worked in a UAW plant as a lark one summer while in college. There was a suggestion box. He quickly saw that a particular process that took ten workers could be done, with minor modifications, in less time by four. He dropped that idea into the suggestion box.

The next day, he was grabbed by the collar by the union steward, who then tore the note up in front of his face. "We don't do that here."

Then, of course, there are the work rules. Machine breaks. Needs to be shut off to be fixed. Only a union electrician can do the complex procedure needed to shut it off (that is, flip a single switch). Wait for electrician to bother to show up. For hours, if need be, while no work happens. If an assembly person flips the switch? GRIEVANCE! If a manager flips the switch? GRIEVANCE!

The union, of course, has a simple solution for that problem: hire a union electrical guy for each machine and have them sit around all day, flipping the switch if need be.

If consumers won't buy then they should go down. If they go down there will be a vaccum and buyers will gravitate to competitve choices available. As that happens those manufacurers will expand operations, contracting with ancillary and other supporting manufacuring operations and suppliers.

AllenS, ask what happened when the Detroit newspaper unions tried to strike in the 1990s. Once management figured out they could operate with a lot fewer workers because of the publishing revolution, the strikers were SOL. They were fighting for UAW-style work rules, etc., not realizing time had passed them by. Oops.

Then, of course, there are the work rules. Machine breaks. Needs to be shut off to be fixed. Only a union electrician can do the complex procedure needed to shut it off (that is, flip a single switch). Wait for electrician to bother to show up. For hours, if need be, while no work happens. If an assembly person flips the switch? GRIEVANCE! If a manager flips the switch? GRIEVANCE

This was par for the course at some mills I worked at (as an outside contractor). US Steel wasn't as onerous in terms of that kind of stuff as some others. I could drive our own forklift and make repairs on our own equipment without having to call a millwright or pipefitter to do it.

When I worked at Bethlehem for a month on a trial we couldn't wipe our ass without permission. If our gunning lance needed to be changed we needed to call a pipefitter. Needed new material in our injectors, call a mill driver to load it.

Funny how when it came to actually standing in front of the 2500 degree furnace spraying refractory material to maintain the furnace lining they didn't want to do that.

I most certainly have. But you have evidently not heard that right now corporations are trying to get congress to waive funding rules during this crisis. This is typical of what happens. Corporations can skip payments to the fund if their investments are doing well enough when the market is going up (which artificially inflates profits and hence stock prices), and when times are bad, they get waivers allowing them to shortchange the pension fund even more.

May I suggest you visit the PBGC website and familiarize yourself with how it works.

I know how PBGC works, but what happens at the point where the liabilities of the PBGC exceeds its revenues (And everyone knows that they are just a few big bankruptcies away from that happening)? The answer of course is that they are going to have to dip into general revenues.

"I could drive our own forklift and make repairs on our own equipment without having to call a millwright or pipefitter to do it."

I was a co-op student at GE back in the '80's. One time we needed to move a cabinet from one lab to the next lab down the hall. My boss and I moved it to the door, he stepped out into the hall to make sure the coast was clear, and then we scurried to the next lab with it. All to prevent a union worker from filing a grievance. Another time at the same location, I was working with an outside contractor trying to trace the flow of a millwater system. Our plan was to pop off a manhole cover, pour dye into the system, and then see where it ended up. Several workers watched as we popped off the manhole cover, and then one approached us to ask if we knew that what we were doing (removing a FUCKING manhole cover) was hourly work. I am a descendant of coal miners. Screw anyone who says I am anti-union. There are plenty of perfectly good unions out there. But unions aren't all automatically good by virtue of being a union.

On what basis do you think pay arises? Where does it come from? What limits it?

Just like you and your patients and the insurance companies you work with, the unions negotiate with their employers. Of course, you have a state agency that licenses you, so your profession is protected to some degree and artificially scarce.

When I see you arguing that doctors shouldn't be licensed by the state then I will take your anti-union screeds a little more seriously.

We had no work rules. The #1 pressman once a month would work the back hanging rolls. That was a job for the #3. The #2 (if qualified) would run the press with the #3 helping. Sometime in the mid 90's we had a #3 who was a Hmong from Laos. Limited English but willing to work. Had no idea what 1/8 of an inch meant. Roman numerals? Not a clue. He was willing to work and learn. It took a while, but eventually I could let him set the color and registration while I bundled. Again, I didn't make that much money, at least compared to an auto worker, but the company is going strong.

AllenS, one of the newspapers' union rules in Detroit pre-strike required them to have two people at a loading dock. One did the work. The other was there to make a phone call if any supplies were needed, and sat there the rest of the time. The first guy was not allowed to use the phone.

Boy, that Harry Reid. What a card. Trying to scare the crap out of people and blackmail the public with a market crash if the AUW doesn't get their way and we don't give billions of dollars to the auto industry.

Terrible day on Wall Street. The blood was running in the gutters. NOT!

Told ya. The market would look favorably on Chapter 11 and restructuring of the industry and will not like a 'bail out' with no strings attached.

As a proud member of buggy whip makes local 192, I am encouraged by the support from some of the commentators and know they back me 100% in getting the US government to provide my long dormant employer with a few billion in seed money so that I can get the salary I richly deserve. Plus 100+ years in back pay. I would like to point out that it isn't my fault no one drives a buggy anymore. It isn't my fault that no one buys our product anymore. None of this is my fault, therefor I deserve to have the taxpayers support me.

In my most recent history, I was a member of the Steelworkers. I have also been in the IBEW. In my technical career, I have supported plants that employed Steelworkers. Every excess that others have described in regards to unions I have also observed. In 01 I worked for a tech company and made a decent wage. The management made a number of really stupid decisions and the company is now a shadow of what it was. Where was my check then?

As a proud member of buggy whip makes local 192, I am encouraged by the support from some of the commentators and know they back me 100% in getting the US government to provide my long dormant employer with a few billion in seed money,

I'm in. We taxpayers should do for the buggy whip what we did in October for wooden arrows.